Untitled Document

Dun & Bradstreet - Oriental Bank of Commerce SME Cluster Series 2014 : Hyderabad



Q. Please share with us the objective and achievements of The Federation of Andhra Pradesh Small Industries

A. The Federation of Andhra Pradesh Small Industries Association (FAPSIA) is a Federation of 42 Industrial Associations
in A.P., with each association having 400-500 manufacturing units in each industrial estate. It is a 20 year old body
and is a recognized Federation by Government of A.P as well as Government of India. It is also a member on the
National MSME Board, New Delhi. This Federation is a permanent member in the State Government Departments of
Industry, representing the problems and policies of the industry. It conducts exhibitions for the promotion of industry
and arranges marketing facilities through Vender Development Meetings.

At the time of crisis and power cuts to industry, it represents to the Government and other departments and as a last
resort it conducts rallies, Dharnas and relay hunger strike to express the resentment against the unilateral damage
caused to industry by the Government. FAPSIA also shares the views in shaping the Five Year Industrial Promotion
Policy of the state. FAPSIA is a sitting member to sanction and disperse the subsidies to industry. Overall, it represents
the needs and grievances of MSMEs to the Government and fights for the revival of sick and incipient sick units in the
SLBC (State Level Bankers Committee and SLIIC Committees in RBI and other banking forum). FAPSIA is also a sitting
member in facilitation council meeting where delayed payments by PSUs are involved.

Q. What is the present status of technology adoption and innovation among SMEs in Hyderabad? Please tell us about
FAPSIA’s efforts towards meeting the major infrastructure and technology related challenges faced by SMEs in

A. The MSME sectors mostly continue to use old or outdated technology. There is a need to adopt new technology from
other industrially-developed states such as Gujarat, Maharashtra, and Tamil Nadu, where the industries have brought
advanced technology either from abroad or developed through their own innovation. Among the MSMEs in Hyderabad,
although the awareness to adopt new technology has picked up, it is still slow. FAPSIA on its part is arranging interstate
exhibitions, foreign tours to countries such as China, Hong Kong, Malaysia, Singapore, etc, and encouraging the
entrepreneurs to visit the world class exhibitions in Germany and other countries.

FAPSIA is also trying to arrange inter-state technology study tours and also district’s visit with the help of the Government
with one of the Government officer’s participation. In these district awareness meetings, we involve technocrats, local
district industries centers, engineering colleges, unemployed educated youth and banking officials for full fledged
knowledge for inviting new entrepreneurs to bring awareness among them about Government support and incentives
available to men, women, SC& ST groups.

Q. Skill gaps remain a major challenge for SMEs. How can the SMEs bridge the demand and supply gap for skilled
manpower? What role can the government play in this direction?

A. Yes, there is very much a severe shortage of skilled personnel in MSMEs. The existing efforts by the Government to
train in CITD centres are not sufficient. The state government in the respective states must strengthen the training
system in ITIs and engineering colleges so that the trained educated people can fill the skill gaps in the industry, trade
and commerce. At present, the SME entrepreneurs are recruiting unskilled workforce and training the intelligent and
educated persons as skilled in their units and utilizing them. Here, once again, the entrepreneurs face the problem of the
skilled workforce leaving the organization once they acquire training, either for higher salary or for shifting to medium
or major industries. So, this remains a perennial challenge faced by the MSMEs.

Q. What has been the impact of the current economic slowdown, both domestic business and exports, on the SMEs
operating in Hyderabad? Which are the main sectors hit severely?

A. The adverse impact of the economic slowdown has been manifold. Firstly, there is lack of uninterrupted supply of
quality power. There has been shortage of power since last 3 years, but the government has failed to meet the demand for power from industries, agriculture and domestic. There is also lack of planning for new power generation as also
high rate of power tariff. Further, there has been political unrest in Hyderabad since the last 18 months. The city also
suffers from lack of sufficient infrastructure, lack of market exposure, low buying capacity of the common man, effects
of the global slowdown, among others. High interest rate of credit to MSMEs, stringent Government policies for exports,
hurdles in duty drawback policies to SMEs and non-implementation of banking schemes relating to industry are some
of the impact of the economic slowdown.

Q. Please throw some light on the necessary measures and policy support that will drive growth of SMEs in Hyderabad,
and take them to the next level of growth.

A. The following measures are necessary, mainly from the Government and banking sectors.

  1. Educated people and school dropouts must be imparted quality training in ITIs (Industrial Training Institutes) and
    engineering colleges
  2. Land must be made available to the industry at reasonably cheaper rates
  3. Quality power should be available at reasonable tariff
  4. Adequate infrastructure facilities such as roads, electricity, drainage, ETP and water should be made available in
    industrial estates
  5. Credit to the industry must be available at base rate (i.e.10%)
  6. The banking schemes such as easy credit and CC loans to industry on CGTMS schemes for the growth of SMEs
  7. The Government should closely monitor the problems and progress of the industry with frequent one-to-one
    meetings with industrial Federations.
  8. The Minister for industry must increase thrust on the development of the industry sector, with frequent visits to
    industrial estates and interactive meetings with Associations and Federations.
  9. The Government, particularly State Government, must promote inter-state industrial tours, sending the entrepreneurs
    to visit exhibitions abroad.
  10. Encourage conducting the local Vender Development programs and exhibition in the state.
  11. Cluster type industries should encourage involving Associations, Government departments and technocrats, which
    will pave the way for local consumption and for exports.